Thames Water vans as repair and maintenance work takes place in London, on April 3.Toby Melville/Reuters
Britain’s Thames Water said on Wednesday that creditors holding more than 75 per cent of its Class A debt had backed a £3-billion ($3.82-billion) funding lifeline, giving it breathing space to shore up its finances and avoid nationalization.
The indebted utility said reaching the acceptance threshold was an important milestone in securing the funds, and a process was ongoing to allow further creditors to participate.
Thames Water has been teetering on the brink of collapse since its investors called the company “uninvestible” in March, refusing to pump in new cash, destabilizing its finances and putting the government on standby for nationalization via a special administration regime.
The creditor group, which includes Abrdn, Apollo Global Management, Elliott Investment Management, Invesco, M&G and PIMCO and which represents more than £12-billion of Thames Water’s debt, said on Wednesday it was a “decisive vote of confidence” in the first stage of its plan.
“It shows that there is a genuine will to develop a market-based solution which saves U.K. taxpayers from shouldering the costs of special administration,” a spokesperson said.
“Our group is working intensively with the company and providing it with the resources and turnaround expertise it needs to ultimately attract strategic equity and rebuild.”
The funding proposal comprises an initial £1.5-billion and an additional £1.5-billion if Thames appeals the regulator’s determination on how much it can raise customer bills, which is due in the next couple of months.
A rival group of B Class bondholder has proposed an alternative liquidity package, which it says Thames Water should keep under consideration.
“The Class B Group will continue to press for a better alternative for Thames Water, which we are confident can and should still be implemented,” a spokesperson for the group said.
The rescue plan to which Thames has agreed needs 75 per cent of all classes of debt to go ahead.
Thames Water said early voting also suggested that consent would be given for a separate proposal to permit the use of cash in its reserve accounts at a bondholder meeting to be held on Nov. 18.